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June 19, 2009

Supply Chain Management in Apparel Industry

Abstract

This study used small-scale apparel companies
based in Hong Kong to determine the SCM techniques applied by these businesses
as well as the benefits and difficulties encountered with its application. By
means of using the combined qualitative and quantitative approaches, the
researcher gathered data using the survey and interview method. Five apparel
companies had been selected for the investigation; 5 members of the companies’
management sector went through the interview process while 25 staff employees
answered the Likert questionnaire prepared by the researcher. In order to
analyze the gathered survey results, the weighted mean for each survey item was
computed and compared to a Likert scale for interpretation. The results were
then subdivided into categories for clearer presentation and comprehension. The
results of the interview were incorporated to the values acquired from the
survey. Relevant literatures were also integrated to support the gathered
findings.

Results showed that apparel companies utilize
multiple communication means to relay information among supply chain members;
assistance of SCM experts are also utilized for the implementation process. The
implementation of SCM had been beneficial as this helped in improving the
communication channels, production and services of the companies. Results also
indicated that technology and cost factors appear to be the most common
difficulty encountered by the apparel companies.

The management of supply chains is
one of the significant strategic aspects of business organizations. Managing the
production of the company’s good and services, monitoring storage inventories,
contacting suppliers and ensuring timely distribution of goods are some of the
major activities covered by supply chain management (SCM). The supply chain is
actually made up of three important components which include cash, product and
information. Within the chain, the suppliers, retailers, manufacturers,
wholesalers and consumers interact with one another. Through these components
and members, the management of the supply chain allows efficient inventory
control. As a dynamic process, the SCM requires the continuous exchange of
information, funds and materials between and within the members of the chain (
2001). These features of the SCM also make this business aspect challenging to
implement and maintain.

Among the business sectors applying
SCM practices, the apparel industry is one of those who have been applying this
strategy. This is particularly evident in countries where the apparel, clothing
and textile industry serve as essential economic contributors. In Hong Kong, the
apparel industry is one of its important and highly contributory economic
sectors; thus, various local apparel manufacturers and businesses are employing
various innovations so as to operate successfully, both in the local and
international setting. This study was then conducted in order to determine how
apparel business operators in the country are using supply chain management
practices and what SCM techniques. The impact as well as the difficulties
encountered by these companies with SCM application was also identified.

Industry Information

The apparel industry is a business sector
comprised of companies producing and distributing clothing merchandise. The
market of the clothing industry is mainly influenced by economic issues; in
particular, as consumers are into more prosperous economic conditions, the
demand for more luxurious clothing increases. While this industry is affected by
common business issues such as economic factors and competition, this industry
is also greatly affected by consumer trends, such as seasonality and fashion.
With these affective factors, the apparel industry typically encounters problems
such as demand uncertainty; this problem on the other hand, is addressed by
apparel companies through product variety.

In Hong Kong, the apparel industry
is one of major industries under the manufacturing sector. According to the
(2006), the gross profit gained from this industry amounted to HK$35.9 billion
in 2003. Aside from profitability, the industry is also considered as a major
employment generator, where about twenty-eight thousand employees are working
within its 1,600 work sites as of 2005. A major percent (40%) of the country’s
domestic exports also come from the apparel industry. The Hong Kong apparel
industry is also a significant center of clothing sources even in the
international level.

The apparel industry of Hong Kong
has reached a high level of professionalism that several companies operating
within are capable of establishing strong customer relations from both local and
foreign markets. The exporters of the industry are also well-informed of the
different protocols and regulations involved in clothing trade. Some local
operators of apparel business have also extended their manufacturing operations
to retailing. Retail networks of these businesses have even reached major cities
abroad including Singapore, Taipei, Beijing, Tokyo, London and New York.
Department stores in Europe and US are also carrying clothing merchandises made
in Hong Kong. Clothes from the country are also sourced by some of the most
premium clothing labels like Ralph Lauren, Calvin Klein and Tommy Hilfiger. The
fashion designers of Hong Kong on the other hand, have also been gaining world
recognition for their designing skills and expertise (2006). From this
industrial description, it is clear that the apparel industry play a significant
role in Hong Kong’s business and economic environment.

Rationale of the Study

The apparel industry is an important business
sector in Hong Kong. For this reason, companies operating within this industry
must then be able to apply business strategies that would help sustain the
growth of the clothing sector. This means that by modifying some of the exiting
business procedures of the apparel companies, such as their SCM systems,
continuous progress and development in the industry may be observed. By means of
identifying the current SCM practices of some local clothing companies, business
areas for improvement can be identified. This in turn may enable the formulation
of better SCM practices that would contribute to the continuous progress of the
apparel industry. The development of the supply chain management in this Hong
Kong business sector can also likely strengthen its connection with the
international market.

Objectives of the Study

The aim of this research is to describe and
analyze the current supply chain management system applied by Hong Kong business
operators within the apparel industry. This research was conducted to achieve
the following objectives:

To identify the techniques used by some
apparel business operators in Hong Kong

To determine whether these practices are able
to benefit the selected companies

To cite possible problem areas or
difficulties encountered by these companies with SCM

Significance and Limitations of the Study

This study can be of significance to businesses
operating in Hong Kong’s apparel industry. As this study deals with the
identification of the possible problem areas of the current SCM systems of these
companies, this study can be useful in the formulation of possible alternatives
that would address the identified problem areas. Moreover, companies that are
yet to develop their own system may become more aware of what benefits supply
chain management can bring to their business. Overall, this study can increase
the awareness of companies on supply chain management, including those not
operating under the apparel industry.

In order to achieve more specific
findings, the researcher opted to integrate some limitations in the research
process. In particular, this study only focuses on the supply chain management
practices or techniques within the apparel industry. The benefits of SCM as well
as the problems involved in its application are also part of the study. In the
data-gathering procedure, due to time and budget constraints as well as
proximity reasons, the researcher considered it appropriate to concentrate the
research using the Hong Kong setting.

II. Review of Related Literature

Due to the growing intensity of
competition in both local and global business sectors, several companies and
service providers have realized the need to develop more strategic approaches
for managing supply chains. These affective factors and realization then led to
the development of tradition SCM systems up to the advanced systems companies
apply at present. The evolution of supply chain management occurred during the
1990s; at this time, collaboration between manufacturers and suppliers had been
established in order to enhance traditional approaches in supply management
functions. At the same time, retailers as well as wholesalers had integrated
their logistics operations as well so as to achieve greater competitive
advantages ( 2002).

In the process, both of these concepts were
joined and became a strategic approach to what is now known as supply chain
management (SCM). In this chapter, the relation of the apparel industry to SCM
is explained. Models, implementation needs as well as the dilemma on the
application of SCM systems are also discussed through the citation of various
related literatures and studies.

Relevance of the Supply Chain to the Apparel
Industry

The apparel industry goes through a number of
business challenges. Due to certain trends like fashion and consumer
preferences, companies operating in the industry often encounter the issue on
demand uncertainty. In order to address this, apparel businesses utilize the
concept of product variety. This technique however, would require certain
activities such as production systems, forecasting and inventory management.
This then emphasizes the need for the apparel industry to employ innovative
systems to manage and handle its supply chains. Traditionally, the supply chain
approach of apparel establishments is made up of the formation of inventories
for raw materials, work processes and finished products. (1998) stated that with
the traditional supply chain approach, apparel companies tend to react slowly to
changing consumer trends as they establish similar inventory levels for both
volatile and non-volatile goods. However, the development of SCM systems through
innovative and more advanced tools allowed apparel companies to acquire useful
benefits.

Through supply chain management,
the information between business partners are optimized and collaborated; most
importantly, SCM systems help in reducing inventories, which in turn can lessen
operational costs, compress order cycle time, enhance asset productivity as well
as increase the companies’ responsiveness to the market (1997). Aside from these
benefits, the apparel industry is able to achieve quick response (QR) through
efficient SCM practices (1998). Quick response is a concept pertaining to the
collaboration and sharing or information among manufacturers, suppliers and
distributors, allowing them to respond more rapidly to the needs of the
customers. Previous studies have noted that QR concept brought about by supply
chain management is advantageous to the apparel industry as well as to
fashion-oriented businesses (1995; 1998).

The relevance of supply chain
management to the apparel industry Is high as various SCM-related activities and
factors are observed in clothing companies. One of which is the involvement of
raw material suppliers in an apparel business’ supply chain. Manufacturers of
clothing merchandise order and buy various yarns, fabrics and other textile mill
products from suppliers so as to make their finish products. As most
manufacturers would have to deal with multiple suppliers for their
highly-diversified product lines, a system to manage the suppliers is an
important strategy. Moreover, the SCM technique is essential for apparel
manufacturers to keep track of suppliers who specialize in multiple types of raw
materials ( 1997).

A supply chain management system is also
relevant to the apparel companies as this helps in keeping track of the
suppliers, in terms of the quality of their services and supplies. This aspect
is particularly important since suppliers have the tendency to the supply chain
off balance. By means of analyzing suppliers and assessing their performance,
the uncertainty on the supplies of raw materials will lessen; in addition, the
inventory performance of the apparel companies will also be improved ( 1993). By
efficient information exchange and communication brought about by SCM, apparel
companies can deal with supplier that suit their needs. Data on the suppliers’
product stocks, costs, speed and reliability can be obtained through SCM; in
turn better inventory performance and strong company-supplier relations can be
established ( 1997).

Another factor that relates the apparel
industry to SCM is the companies’ connection with the retailers. While some
apparel companies distribute their products directly to consumers, most
manufacturers utilize the services of the retailers. The application of an SCM
system on the other hand helps in strengthening the relationship between both
parties as well as in achieving positive business outcomes. Considering that
the apparel sector encounters the problem of demand uncertainty, SCM allows the
companies to communicate with their retailers; this feature of the SCM enables
them to forecast product demand jointly. The participation of the retailers with
the SCM system of the company helps the apparel companies to obtain valuable
consumer data such as end-customer demand levels; this will then help in
reducing the manufacturers’ errors in determining raw material and production
volume.

Supply Chain Management Models

There are a number of supply chain management
models introduced in order to explain the different activities involved in the
SCM process. One of the known SCM models is the SCOR model, which was developed
and promoted by the Supply Chain Council in 1996 as the standard model for
cross-industry SCM. The development of this SCM model was done in participation
of over 70 major manufacturing companies worldwide. It serves as a process
reference model which combines three important business concepts, including
reengineering, process measurement and benchmarking (1999). The main objective
of this model is to support effective communication among companies operating in
one or several industries.

The SCOR model is made up of four management
factors that comprise the SCOR Project Road Map (2004). These factors include
PLAN, SOURCE, MAKE and DELIVER. In the PLAN factor, processes that help in
balancing the aggregate demand with the supply so as to meet set business
regulations are involved. Business process that enables the procurement of goods
or services so as to meet the planned and actual demand falls under the SOURCE
factor. The MAKE factor on the other hand, is focused on activities that
transform goods into finished products in order to meet the planned or actual
demand. Activities such as warehouse management, order management as well as
transportation and installation management are considered the DELIVER factors;
in general, these processes incorporate all processes that produced the finished
products or services (1999).

Models for SCM tend to vary from one another as
companies develop them in accordance to their supply chain management needs.
Despite the difference, SCM models basically contain two essential nodes; these
are the facility nodes and the customer nodes. The facility nodes pertain to the
factors controlled by the supply chain; these nodes also include the sites where
raw supplies, components and final goods are taken out, manufactured, stored and
distributed. The customer nodes on the other hand, do not exhibit any form of
activity. However, in an SCM model, this node represents the demand level for
the products produced and distributed by the facility nodes. The nodes of an SCM
model are connected through links, representing how products are transported
within the chain ( 2004).

(1995) also explained that developers of
SCM models apply certain modeling approaches, depending on the SCM design needs
of the company. One of these approaches is called the Network Design approach is
centered on the development of strategic normative models. This approach gives
more focus on the design of the supply chain as well as the networks flows
within the model. Another approach is refereed to as the Rough Cut approach.
Contrary to the Network Design method, this approach is focused on identifying a
single site and adds various supply chain features in it, rather than create a
network. Another modeling approach is the Simulation method, where both
strategic and operational elements of the SCM can be used and analyzed.

Implementation of Supply Chains

In order to apply SCM practices, the
utilization of information and communication technologies (ICT) is typically
done. As ICTs have been implemented in the business industry, organizations have
attempted to implement them on various operational processes. In supply chain
management, information technology plays a number of significant roles. S (2003)
for instance, noted that ICT is applied to SCM so as to provide data visibility
and availability. In addition, ICT also enables the development of a single
contact for information, which in turn, facilitates decision-making.
Furthermore, computer systems for SCM also have analytical features that are
useful when managerial decisions are needed. Supply chain partners are also able
to collaborate effectively through ICT. Information technologies allow
information-sharing among supply chain partners that helps reduce transaction
frictions and costs ( 2000; 1997).

ICT-based SCM systems enable business firms to
perform mass production of goods with greater quality at a lesser time.
Interacting with external partners has also improved significantly due to
intranet systems and e-commerce platforms. Through the establishment of
communication networks, manufacturers, suppliers and consumers are able to
interact efficiently. Aside from these, handling valuable data becomes less
tedious and costly as ICT systems allow automatic information gathering and
processing (2000). The performance of autonomous actions through ICT machineries
helps in reducing human work load and effort. Moreover, the use of ICT in
business has been critical to management due to other important benefits such as
increased responsiveness to customer demands, lower order cycle times as well as
higher business profitability (2002). Indeed, knowledge transfer through ICT has
been a significant source of competitive advantage for several companies.

Presently, various information and
communication technologies are made available to business owners, from
less-sophisticated to more advanced systems. The introduction of internet in SCM
is among the important elements of this aspect’s evolution. In particular,
internet utilization facilitated the ease of interaction between business and
business partners (B2B) and consumers (B2C). Through the internet, online
deliveries, information searches as well as mass customization are all made
available to the customers. Manufacturers, suppliers and distributors on the
other hand, benefit from internet utilization through well-coordinated
information sharing. Online auctions are even made possible with this
breakthrough (2000).

Evans and associates (1995) noted that the
development of ERP or Enterprise Resource Planning systems also contributed to
the evolution of SCM practices. Aside from information exchange, this ICT-based
system has also enabled proper monitoring of orders, materials, schedules and
inventories. Business process engineering was also made easier through this ICT
system. EDI or Electronic Data Interchange is yet another product of ICT that
helped enhanced SCM processes. Private wide-area networks or value-added
networks (VAN) were conventionally used to implement EDI. This however made EDI
too costly for small and medium sized companies. With the introduction of the
internet-based EDI, these enterprises are now able to acquire the benefits of
EDI application ( 2000).

Through EDI, computer systems are linked across
organizational boundaries, which facilitate electronic data exchange that does
not necessitate human intervention. The EDI is then beneficial as it increases
the response rate of the company as well as its accuracy. Expenses incurred in
transactions are also considerably reduced. In addition to these advantages,
business strategies such as vendor managed inventory as well as just-in-time
delivery were made possible through the EDI. Vendors were also able to develop
recent ICT-based systems for SCM. These include the Manugistics and the i2. With
these technologies, businesses are able to apply analytical applications that
are useful for planning, scheduling and revenue management. This in turn is
useful for the optimization of the manufacturing, supply, transportation and
distribution processes. According to (2001), these are actually sophisticated
algorithms which depend on transactional data inputs from either ERP or legacy
systems.

The implementation of SCM systems along with
the integration of ICT led to a number of significant business outcomes; these
have been confirmed by a number of relevant literatures and studies. For
example, it has been noted that ICT lead to enhanced logistics as it allows the
development of centralized strategic planning (1995). (1987) on the other
hand, suggested that the advantages of electronic-based SCM systems are centered
on electronic integration, speed of communication and efficient market
resolutions. Recent researches noted that ICT on SCM systems appear to be more
important for industries that value speed in processes. In addition,
(2000) noted that the use of ICT for supplier chain management is also
beneficial for businesses who intend to find larger supplier bases at a lower
cost. (2000) on the other hand, concluded that ICT is beneficial to SCM as
it enables the reduction of inventories and cycle time. The efficacy of the
distribution channels is also improved through ICT application.

In other studies, the establishment and
maintenance of strong relations appear to be another significant impact of ICT
on SCM. (2000) for example, found out that the use of internet for SCM
allows collaboration among channel partners. (2001) on the other hand,
implied that the use of electronic SCM helps companies to create good
relationships not only with the suppliers but with customers as well. With the
increasing competition in the business industry, effective relations is very
essential; the management of relationship is then made easier through ICT
(2002). Clearly, these researches stressed the value of electronic SCM in
creating competitive advantages.

Dilemma faced in Implementation

While the implementation of SCM
systems along with the utilization of ICT has been advantageous to many
companies, some establishments are hesitant on applying this strategy. This
tendency has been stressed further by researchers claiming that supply chain
management and its benefits should not be taken in general. For instance,
(1999) noted that the benefits of ICT-based supply chain management cannot be
achieved unless certain factors are present, such as the type of ICT or the
number of supply chain members involved. (2002) also stated that the
efficacy of electronic SCM systems can be achieved by meeting a number of
standards pertaining to the definition, ownership and timing of data. From these
cited requirements, it is clear that some companies are hesitant to implement
SCM systems as it can be a time-consuming and tedious process.

Other studies have focused on
companies that are hesitant to adapt new SCM systems. The research of
(1999) for example, cited that some firms are hesitant on implementing advanced
technology with their supply chain operations. This is mainly due to the
companies’ inability to see the benefit of online business transaction when this
activity can be conducted through phone. This finding is somewhat correlated to
the financial demands of implementing ICT for supply chain management. As some
organizations would have to purchase and install new technologies to replace
their traditional SCM systems, business owners are not as willing to use ICT for
SCM enhancement, despite their awareness of its advantages. (2000) stated
that aside from the cost of ICT, firms are apprehensive to use ICT to improve
their supply chain systems due to security risks.

As internet is used for electronic-based SCM,
businesses become more exposed to internet related security issues. One of which
is relevant to information system privacy where some people sell private or
personal information through the internet. This security issue is brought about
by purchases or transactions made online. With online access, profiles
containing various information, from the user’s activities, interests, location
and contacts, can easily be acquired and sold to anyone who needs it for
whatever purpose. Aside from customer information, company data may also be
obtained illegally, putting the organization to a greater disadvantage.
(1997) noted that another common security challenge is the computer virus, which
can be obtained from programs downloaded, e-mails and other online means of
interaction. Although there are readily accessible methods to address these
security problems, additional costs and preparations will have to be allotted to
address them.

In the study done by (2003), the
researchers identified the different factors that hinder businesses from
implementing ICT in their supply chain management systems by means of a
questionnaire in Likert format. The results of the survey concluded that
barriers to the implementation of advanced SCM systems include financial costs,
lack of standards as well as resistance among distributors, manufacturers and
customers. Furthermore, some trading partners are unprepared for this
advancement. Some firms also stated that their businesses do not need such
technologies. From these factors, it can be said that one major limitation of
electronic SCM is that ICT cannot be readily applied. The business would have to
analyze its needs and resources first before it can be implemented. As some
organizations lack the technical knowledge or financial resources to support
ICT-based SCM systems, some businesses are not as willing to apply this
strategic option.

III. Methodology

Research Methods to be used

In this research, the descriptive method was
utilized. The purpose of
employing the descriptive method is to describe the nature of a condition, as it
takes place during the time of the study and to explore the cause or causes of a
particular condition. The researcher opted to use this kind of research
considering the desire to acquire first hand data from the respondents so as to
formulate rational and sound conclusions and recommendations for the study.
According to(1994), the descriptive method of research is to gather information
about the present existing condition.

This research method is
advantageous for the researcher due to its flexibility; this method can use
either qualitative or quantitative data or both, giving the researcher greater
options in selecting the instrument for data-gathering. The aim of the research
is to determine the SCM techniques in the apparel industry and identify the
effects of this strategy to certain companies; the descriptive method was then
appropriate for this research since this method is used for gathering prevailing
conditions. The research used managers and employees as respondents from apparel companies
based in Hong Kong in order to gather relevant data; the descriptive method was
then appropriate as this allowed the identification of the similarities and
differences of the respondents’ answers.

Two types of
data were used: the primary and the secondary data. The primary data were
derived from the answers respondents gave in the structured questionnaire
prepared by the researcher. In
addition, the information obtained from the interview also provided primary
research data that supported the study. The secondary data on the other hand,
were derived from the findings stated in published documents and literatures
related to the research problem. These were based from the recent
literatures related to supply chain management, SCM practices and the effects of
this business strategy cited by the respondents.

In terms of approach, the study employed both
qualitative and quantitative approaches. The quantitative approach focused on
obtaining numerical findings was used with the survey method. The interview on
the other hand, made up the qualitative approach of the study as this focused on
personal accounts, observations, description and individual insights of the
interviewees. This study employed the combined approach so as to overcome the
limitations of both approaches.

Respondents of the Study

In order to gather pertinent information
regarding supply chain management techniques and effects, the participation of
apparel companies is necessary. Thus, for this study, the researcher opted to
gather helpful information from 5 apparel companies. Due to various research
constraints such as time and budget, the researcher decided to use a smaller
sample size. In order to limit the selection among the several companies
operating in Hong Kong, the researcher made use of some inclusion criteria.
These criteria are also useful in achieving more generalizable findings from the
respondents. Thus, apparel companies selected for the investigation are all
small-sized and Kowloon-based apparel businesses. Moreover, the companies are
only capable of distributing their products to local consumers.

Within these selected companies, two types of
respondents were asked to participate. Specifically, 5 members of the management
sector from these companies were asked to undergo the interview process. In
addition, 5 staff members from each selected company were also chosen to
accomplish the questionnaire done for this research. All the staff employees
considered for the study work in the supply chain sector of the selected
companies; this criterion helped in limiting the size of the population as well
as in ensuring that selected participants are knowledgeable on the research
topic. All in all, this study made use of 30 respondents. The researcher used
two types of respondents in order to achieve the objectives of this research.
The information given by the management staff provided the overview of the SCM
techniques applied by small-sized apparel companies in the country. On the other
hand, the data given by the employees helped in identifying the benefits of SCM
as well as the issues related to it.

All of these participants were selected through
random sampling. This
sampling method is conducted where each member of a population has an equal
opportunity to become part of the sample. As all members of the population have
an equal chance of becoming a research participant, this is said to be the most
efficient sampling procedure. In order to conduct this sampling strategy, the
researcher defined the population first, listed down all the members of the
population and then selected members to make the sample. For this procedure, the
lottery sampling or the fish bowl technique was employed.
This method involves the selection of the
sample at random from the sampling frame through the use of random number tables
(2003). Numbers were assigned for each employee in the master list. These
numbers were written on pieces of paper and drawn from a box; the process was
repeated until the sample size was reached.

Administration of the Research Instrument

Research Instrument

For this study, two research instruments were
used to describe and assess the SCM systems of the selected Hong Kong-based
apparel companies. These research instruments included the survey and interview
methods. A structured questionnaire was distributed to the selected company
employees (See Appendix A). The questionnaire given to the participants aimed to
evaluate the effect of their respective firms’ SCM systems. The evaluation
factors are developed in terms of the benefits and difficulties encountered from
implementing SCM. These evaluation factors were based on the study conducted by
(2002) wherein the benefits and issues related to SCM application had also been
analyzed. In general, the effects of the SCM practices of the apparel companies
were evaluated for this study in order to determine whether its systems are
beneficial to the industry or not.

The questionnaire was structured in such a way
that respondents will be able to answer it easily. Thus, the survey was
structured using the Likert format with a five-point response scale. A Likert
Scale is a rating scale that requires the subject to indicate his or her degree
of agreement or disagreement to a statement. In this type of questionnaire, the
respondents were given five response choices. These options served as the
quantification of the participants’ agreement or disagreement on each question
item. Below are the designated quantifications used in the questionnaire:

5

Strongly Agree

4

Agree

3

Uncertain

2

Disagree

1

Strongly Disagree

Table 1:
Likert Questionnaire Values and Interpretation

The Likert survey was
the selected questionnaire type as this enabled the respondents to answer the
survey easily. In addition, this research instrument allowed the researcher to
carry out the quantitative approach effectively with the use of statistics for
data interpretation. Once all the answers of the respondents have bee gathered,
the researcher computed the weighted mean value for each survey item. The mean
was then compared to the Likert scale to interpret the results. The
weighted mean was used in order to obtain the average values that represented
the sample’s response to each question in the survey. This helped the researcher
identify the general response of the participants to the question given.

In addition to the questionnaire, the
researcher also had members of the management team from the selected companies
to undergo an interview process. An interview schedule was prepared by the
researcher (See Appendix B). The interview method was used in the process in
order to learn more about the companies’ SCM techniques or procedures. The
questions were then designed to gain information on how the companies handle and
manage their supply chains.

As the structured questionnaire is
only limited to the choices provided in each question, other pertinent
information may not be acquired. Moreover, it is difficult to obtain the
intended data on the companies’ SCM techniques using the survey method. Thus, an
interview is necessary. By gaining these data, the results of the survey may be
compared to the outcome of the interview. This can be of use particularly in
identifying the strong and weak points of the companies’ SCM systems.

Data Analysis and Presentation

In order to analyze the data gathered from the
survey, the weighted mean for each question item was computed. Weighted mean is the average
wherein every quantity to be averaged has a corresponding weight. These weights
represent the significance of each quantity to the average. To compute for the
weighted mean, each value must be multiplied by its weight. Products should then
be added to obtain the total value. The total weight should also be computed by
adding all the weights. The total value is then divided by the total weight.
Statistically, the weighted
mean is calculated using the following formula:

or

The computed mean was then compared to the
scale for interpretation:

Range

Interpretation

4.50 – 5.00

Strongly Agree

3.50 – 4.49

Agree

2.50 – 3.49

Uncertain

1.50 – 2.49

Disagree

0.00 – 1.49

Strongly Disagree

Table 2:
Likert Scale

Results of the survey were presented in tables.
Excerpts from the interview were integrated based on the analysis outline.
Relevant literatures to support the findings are also included.

IV. Presentation and Analysis of Data

Benefits of Supply
Chain Management

5

4

3

2

1

Weighted Mean

Interpretation

1. SCM is helpful in
determining the needs of consumers.

6

14

0

5

0

3.84

Agree

In this section, the results of the survey as
well as the interview are presented. The survey results are placed in tables;
the interview results on the other hand are narrated. The second part of the
chapter is centered on the analysis of the results obtained as well as the
discussion of some relevant literature. In order to understand the presented
results, consider the example below:

Table 3:
Sample table from the survey results

In this sample table, the first column contains
the survey question given to the 25 employee respondents. The numbered columns
on the other hand, represent the Likert choices used in the questionnaire (5 –
strongly agree; 4 – agree; 3 – uncertain; 2 – disagree; 1 – strongly disagree).
The numbers placed in the columns are the number of respondents that selected
the given likert choices. Thus, in the example, 6 of the 25 individual
applicants strongly agree that SCM is helpful in determining the needs of the
consumers. The mean column contains the weighted mean for the survey item. This
was computed by multiplying the number of total respondents by the selected
likert choice (e.g. 6 x 5). This was done for all the given choices. After
which, the products were added, then divided by the total number of respondents
(n=25). The computation is shown below:

Weighted mean = (6 x 5) +
(14 x 4) + (0 x 3) + (5 x 2) + (0 x 1)

-----------------------------------------------------------

25

This gives a weighted mean value of
3.84; the computed value is then compared to the likert scale mentioned in the
previous chapter (See Table 2). The interpretation of the scale is then placed
on the last column.

Results

Survey

Benefits of SCM Implementation

Benefits of Supply
Chain Management

5

4

3

2

1

Weighted Mean

Interpretation

1. SCM is helpful in
determining the needs of consumers and achieving their satisfaction.

6

14

0

5

0

3.84

Agree

2. SCM allows the
reduction of response time within the supply chain.

15

7

0

3

0

4.36

Agree

3. SCM is useful in
integrating the activities within the supply chain.

0

10

7

8

0

3

Uncertain

4. SCM system
facilitates the creation of trust among supply chain members.

8

6

4

7

0

3.6

Agree

5. SCM makes
communication among supply chain members faster, easier and more frequent.

11

9

0

5

0

4.04

Agree

6. SCM increases the
Just-In-Time (JIT) capability of the company and the suppliers.

5

7

5

8

0

3.36

Agree

7. SCM enables the
sharing of information both through informal and formal means.

10

12

0

3

0

4.16

Agree

8. SCM helps in
obtaining useful feedback from the suppliers.

9

14

2

0

0

4.28

Agree

9. SCM allows the
company to build closer and stronger relations with the customers.

7

13

2

3

0

3.96

Agree

10. SCM helps the
company in improving its current supply chain system.

9

13

0

3

0

4.12

Agree

Table 4:
Results of the Survey on the benefits of SCM

From this table, it is clear that
the employee participants agree to most of the beneficial factors that can be
gained out of SCM implementation. The results indicated that SCM is beneficial
to four aspects of the apparel companies. These include the customers,
suppliers, the company itself and the supply chain in general. Majority of the
respondents agree that the application of SCM in their company helped in
developing their knowledge with their respective customers. Among the suppliers
and the companies, SCM is also believed to be beneficial as it improve the JIT
as well as the information exchange capabilities of both parties. The selected
companies also agreed that SCM promotes continuous improvement of the existing
system.

The overall supply chain of the companies
also acquires significant benefits through SCM. High scores for instance had
been obtained from SCM aspect such as response time, communication and feedback
acquisition; these high scores indicate that majority of the selected
respondents agree that these SCM factors have been attained by their respective
companies. The supply chain of the companies also benefit from SCM as it helps
in creating trust and building stronger relations among the members. An
uncertain score however, had been obtained in the activity integration aspect of
SCM, implying the difficulty of achieving this SCM benefit.

Difficulties in SCM Implementation

Difficulties in
Supply Chain Management

5

4

3

2

1

Weighted Mean

Interpretation

11. SCM can be
challenging as suppliers may lack the interest to participate in the system.

0

9

0

10

6

2.16

Disagree

12. SCM can be difficult
when the customers are not showing interest to the system.

6

8

0

7

4

3.2

Uncertain

13. SCM is hard to
implement as the company lacks the ability to control the supply chain.

12

7

0

6

0

4

Agree

14. SCM efficacy can be
difficult to obtain when advanced information systems are not available.

14

11

0

0

0

4.56

Strongly Agree

15. SCM can be
problematic when the geographical distance of the suppliers or customers is
not good.

0

0

0

11

14

1.44

Strongly Disagree

Table 5:
Results of the Survey on the Difficulties of SCM

Among the tested difficulties of SCM
implementation, the unavailability of advanced information systems received the
highest score, indicating that majority of the respondents strongly agree that
SCM application is challenging without the access to modern technology. The same
impression had also been obtained in terms of the control the company has on the
supply chain. On the other hand, the issue of geographical distance and the
interest of the suppliers to participate in the SCM system did not seem to be
major concerns among the selected companies. The interest of the customers in
participating in the SCM received an uncertain score, suggesting that this
difficulty factor may not be experienced in the same level as other apparel
companies.

Interview

What SCM techniques have the company applied
for its supply chain operations?

All the companies interviewed for the
data-gathering procedure stressed the collaboration of two of the essential
aspects of supply chain: the collaboration of the supply chain members as well
as the use information systems or technology. The companies declined to disclose
the exact method that they use to manage their supply chains; however, in terms
of techniques, the interviewees stated that the suppliers, retailers and the
manufacturers must share a common channel within the chain. The establishment of
the channel is significant as this would allow supply chain members to exchange
valuable supply and customer information. To facilitate data exchange,
interviewees stressed that appropriate systems must be installed. All companies
use two types of systems: online and phone systems. In order to ensure that all
activities of the chain are integrated well within the system, one interviewee
noted the significance of using customized online programs. Other interviewees
also cited that they have utilized the expertise of SCM experts in order to
develop the most suitable system for their companies’ specific needs.

What are the reasons of the company for
implementing a supply chain system?

The main reason of the companies for having an
SCM system is to adapt to the new trends within the industry. An interviewee
noted that considering that their company operates at a smaller scale,
competition with similar companies as well as with larger apparel businesses can
be cutthroat. For this reason, the companies must adapt strategies that would
allow them to have a more organized production and distribution system, which
would promote higher levels of customer satisfaction. The company interviewees
also cited that the application of SCM is geared towards the enhancement of the
relations among the supply chain members. An interviewee explained that one of
the major problems encountered by apparel businesses is communicating with
different suppliers and retailers. As the manufacturers greatly depend on the
timely deliveries of both supply chain participants, inefficient information
exchange can then result to delayed production and services. Through SCM, the
activities of the supply chain members then become more coordinated. This
benefit however, is still a challenge to attain despite the use of an SCM
system; interviewees explained that this is because communication problems can
still happen brought about by various factors like wrong information,
misunderstanding, power outage or natural disruptions. Without much other means
to communicate, the channel shared by the supply chain members can be disrupted
easily, resulting to supply chain problems.

What requirements have the company considered
in order to implement SCM?

The companies’ main concern in the
implementation of SCM is their ability to support such major investment. The
smaller companies naturally have limited financial resources to invest on SCM
systems as compared to larger companies. The interviewees noted that since their
resources are limited to their available budget, the type of systems that they
have to apply should also be dependent on this important factor. The companies
also considered the utilization of appropriate expert assistance for the
implementation of SCM; two of the interviewees reasoned that the consideration
of this requirement is to ensure that the available resources of their companies
will not be wasted on impractical or ineffective SCM designs. Other interviewees
also cited that obtaining professional help with SCM experts had been helpful as
they are able to prevent problem areas that the companies encountered along the
way; similarly, the prevention of these SCM-related problems helped the
companies prevent expensive troubleshooting needs. The interviewees also noted
that training the people to be assigned in the management of the SCM system is
also a key success factor; for this, the presence and expertise of SCM
professionals have also been helpful.

Aside from these requirements, the companies
also considered the geographical distances of the supply chain members who would
take part in their respective SCM systems. An interviewee noted that it is
easier to communicate with the members within accessible locations; moreover,
the just-in-time ability of the supply chain members would be enhanced further
by the SCM system if this factor is considered. In general, the companies
interviewed considered similar requirements that would optimize the abilities of
their selected SCM system.

What makes the company’s existing system
effective and beneficial?

The interviewees noted that considering
important requirements before the implementation of the SCM system had been an
important efficacy factor. In addition, developing a step-by-step plan during
the creation, implementation and application phases for the SCM system is also a
key; interviewees noted that this was essential in ensuring that all the
necessary requirements for effective SCM implementation are taken into account.
Overall, the interviewees stated that the optimization of the companies’
available resources, efficient planning and appropriate design enable their
existing SCM systems to be effective. In terms of benefits, the interviewees
cited a number of significant developments that they had acquired through SCM
implementation. One of which is that valuable business information has become
more accessible to the companies.

An interviewee explained that as the
manufacturers, suppliers and retailers have developed better communication
channels through SCM, information have improved both in quality and quantity.
Through this benefit, apparel companies became more knowledgeable of their
customers; considering that fashion and trend are important aspects of the
apparel business success, acquiring better consumer and business information is
an important breakthrough. The improvement of the communication among the supply
chain members is also a major benefit; despite the fact that the interviewed
staffs are operating as small-scale companies, the strong business relation
among the supply chain members helped in sustaining successful operations within
the local level. Making the production and distribution of apparel goods more
organized and on time are also important benefits achieved through the SCM.
These benefits in particular had helped the companies to enhance their products
and services as well as attract consumers.

What problems or issues have the company
encountered in relation to SCM?

One of the main hindrances that company
encountered in relation to SCM was the systems to be used for their respective
supply chain operations. The interviewees noted that their budgets were only
limited to small-time supply chain systems; this however, was not as difficult
since their companies are only serving local consumers. Nonetheless, this
important issue had made business competition even harder to overcome by smaller
apparel companies. Interviewees raised that implementing an SCM system is an
expensive investment. As small-scale companies have limited budget to support
it, updating their current systems so as to become more competitive has been
difficult if not impossible. Problems in communication have also been one of the
main issues encountered by the interviewed company managers.

Analysis

In this section, the different aspects of the
data gathered from the survey and the interview are analyzed through relevant
literatures. This section will focus on meeting the objectives of this research.
Specifically, the benefits of SCM and the difficulties encountered by the
apparel companies used in the research.

Benefits

Communication

Based from the results of the
survey, the ability of SCM to improve communication among the supply chain
members appear to be the most common benefit encountered by the surveyed apparel
companies. This has been further supported by the claims of the interviewed
managers. The ability of the SCM to enhance the communication among the supply
chain members is attributable to the information systems applied by the
companies. Specifically, the use of online systems to improve their
communication channels is one of the important keys to this development. As
indicated by (1997), suppliers, retailers and manufacturers who intend to
streamline their logistic systems rely on internet technology as a communication
tool. In fact, the introduction of the internet to SCM paved the way for major
communication upgrades, enabling user companies to communicate effectively not
only in the local setting but in the international level as well.

Global companies operating in Asia
such as Reebok, Liz Claiborne and Ralph Lauren for instance, communicate with
their raw material suppliers through online means; smaller networks are also
established via intranets and extranets. The use of efficient communication
channels among apparel companies had been supported by the telecommunications
development in Hong Kong. In particular, the country has been upgrading its
telecommunications infrastructure continuously. Furthermore, technology for
tracking distribution and warehouse center product shipments has also been used
at higher levels by local companies (1997).

The Innovation and Technology
Commission (2006) has described how Hong Kong has been developing its
technologies, enabling better electronic business logistics operations. The
country in particular has a good IT background and communication networks that
can support SCM-related IT systems. Moreover, the strong research and
development sector of Hong Kong’s industries allows businesses to continuously
identify new means for business improvement. Research organizations and local
universities considered experts on researching and developing IT systems for
supply chain management are even operating in Hong Kong.

Internet technology has indeed
become a key component of SCM systems within the apparel industry; by reforming
their supply chains, companies are able to achieve greater competitive
advantages. As the business sector takes on a new age, major business activities
such as supply chain management have also taken place; this development had been
evident in all part of the globe. In other parts of Asia for example, other
countries have evolved to support better SCM systems. Modern infrastructures and
advanced telecommunication systems have been established in the developed
regions of Malaysia and Singapore. Japan’s internet and telecommunication
infrastructures have been developing rapidly; even its transportation means have
advanced considerably. High-speed communication through fiber optic networks in
the Chinese region, though some of its areas still need development (1997).

The telecommunication and
transportation systems in Europe have also improved greatly, enabling business
industries to employ electronic commerce. South American nation like Chile and
Brazil have been developing as well. Significant developments in their
transportation and telecommunication networks have been observed; nonetheless,
some parts of the regions are still in need of further infrastructural
development (Z1997). Through the use of information systems, the communication
among supply chain members improve significantly, particularly in terms of
quality and speed; this in turn allows apparel companies, even small-size
enterprises, to relay valuable business information, deliver products
effectively, meet consumer needs as well as build stronger relations.

Relations

Indeed, one of the resulting
effects of enhanced communications from SCM is the formation of stronger
relations among the supply chain members. As indicated in the survey, SCM is
beneficial as it allows the members to give out feedback to each other; these
feedbacks help suppliers, manufacturers and retailers in the apparel industry to
improve their products and service deliveries. AS SCM generally helps all
participating supply chain members, good and stronger business relations are
formed. (2001) noted that during the time when the role of SCM in business
was being realized for the first time, several businesses are going through
major difficulties brought about by competition. However, when the supply chain
members decided to integrate their supply chain activities together, production
problems were reduced; design flexibility had been achieved; and quality of the
products improved considerably. From this point forward, members of the supply
chain have fully recognized how SCM systems can bring them together to achieve
even better business outcomes.

The support each supply chain
member gains from each other is then increased through SCM; this level of
dependence is made possible partly by the communication enhancement generated by
the system. With greater coordination, all members are able to play their
designated role in the chain; in turn, this benefit enables the supply chain
members in the apparel industry to develop better products and deliver
satisfactory services. This effect was explained by (1993). In particular,
the authors compared this effect to a well-practiced relay team. When each
player is well-coordinated to the team, their individual roles become more
defined. By knowing each other’s positions, the effort each player exerts
becomes more contributory to the team’s benefit. As a result, relation shared by
the team members becomes stronger.

Ability Enhancement

Finally, the results of the survey
and interview indicated that the application of SCM enables apparel companies to
achieve various improvements in their business abilities. One of the notable
developments in the findings was the enhancement of the just-in-time ability of
the supply chain members. As the interviewees have mentioned, the implementation
of the SCM improved the level of organization within their supply chains,
resulting to faster operation. In turn, this made production and service
deliveries to the customers faster as well. Aside from improving the level of
organization, the communication systems used by the companies made supply stocks
and other business information more visible to the supply chain members; the
improved visibility of these data, helped in reducing the time necessary for
data exchange and updates. Previous literatures on SCM have also noted of this
effect. Handfield (1994) for example, has stated that the application of SCM
results to the replacement of inventories with more visible information. This
improves the JIT ability as supplies and products can be restocked immediately.
The improvement of the companies JIT ability then lies on the ability of SCM to
reduce the need for inventories by redistributing stocks within the supply chain
more efficiently (1993).

(2004) also confirmed the
ability of SCM to enhance the JIT ability of the supply chain members. As the
activities of the supply chain operations become coordinated through the SCM
system, apparel companies are able to make the most of their production and
delivery time. To stress their point, the authors cited Esquel Group, an apparel
company in Hong Kong, as an example. By means of incorporating various supply
chain activities such as weaving, dyeing and sewing procedures, the company is
able to achieve an important business aspect call fast time-to-market ability.
With this feature, the company can have new fabric prototypes as well as new
products within a shorter time span. Through this ability enhancement, the
company is able to attract major customers like Polo, Tommy Hilfiger and Nike
(Dillner and Verga, 2004). By improving the JIT ability of the apparel
companies, their products and services becomes more attractive to buyers,
resulting to larget market coverage and higher sales.

By implementing a standardized and
more organized SCM system, the company is able to manage their inventory
planning needs, warehouse, demand forecasts, transportation as well as inbound
and outbound shipping activities. This in turn helps them in predicting the
needs of the supply chain members and meeting the satisfaction of the customers.
The ability of companies to enhance their supply chain activities is supported
further by the utilization of automated systems and real-time information
updates. These additional supports help the companies identify the most
appropriate and practical distribution and shipping means within a short time
after the order has been placed. This ability enhancement allows companies to
maximize freight operations as well as saved on inventory management expenses.
Most importantly, the efficient services of the apparel companies brought about
by SCM results to higher levels of customer delight as they are able to receive
their order before or within their deadline (2004). This development has been
cited in the interview results with the selected apparel company managers.

Overall, the application of SCM in
the apparel industry is beneficial as indicated by this study’s respondents as
well as the findings of related literatures. With this strategic techniques,
supply chain members sharing a common business goal are brought together. By
using appropriate technologies, these members are able to manage various
logistic activities more effectively. As a result, abilities of the retailers,
manufacturers and suppliers within the industry are developed. These
developments enable the apparel companies to reduce both cycle and inventory
time, enhance productivity, increase market share and profit, establish better
business relations and achieve higher customer satisfaction. The implementation
of an SCM system in the apparel industry indeed results t a chain-like reaction
where the management of the supply chain improve the capabilities of the
members, leading to improved business outcomes.

Difficulties

Though SCM has been beneficial to the apparel
industry, the results of the survey and the interview also revealed some
difficulties companies encounter with its application. These difficulties are
mainly concentrated on technology and cost involved in SCM implementation.

Technology and Cost

As discussed previously, technology
plays an important role in the implementation of SCM systems, especially in
enhancing communication channels. Leading companies, including those in the
apparel industry have been able to streamline their logistics operations mainly
through the adoption of appropriate technologies. This then encouraged program
developers to come up with systems that would support easy and more effective
SCM system application. Microsoft for instance has worked with several
logistics, hardware, software and transportation companies in order to create
international standards that would allow suppliers, manufacturers and retailers
to share information with each other; this project was named as the Value Chain
Initiative (VCI) (1997).

Inventory control, import and
export transportation, distribution management, warehouse management, electronic
data interchange and other logistics-related activities are all incorporated in
the VCI project. This and many other technologies that followed had been useful
in improving the communication and information exchange among the supply chain
members; ultimately, this development allowed major companies to reach out to
foreign markets and operate internationally. In order to achieve this advantage,
manufacturers and suppliers would naturally have to invest on these
technologies. This however, hinders other companies, particularly smaller ones,
to enhance their SCM systems or apply one of their own.

In general, utilization of
technologies and high-end communication systems for SCM is a very costly
investment. The electronic data inter change (EDI) system for example, is very
expensive to implement. This is why some nations are hesitant to apply this SCM
technology. Another factor raised is that some of these technologies lack the
standards for general application. In addition, technology changes rapidly over
time; rather than allocate considerable resources to support a system that would
need to be updated or replaced within just a short span of time, other companies
would just go on more common and less expensive alternative such as online-based
systems. This practice has been observed in countries like Taiwan and Hong Kong
(1997). This has also been stressed as a problem encountered among the
smaller-sized Hong Kong-based apparel companies used in the study.

While some apparel companies are
encountering SCM-related problems due to technology and cost, there are
available alternatives that could address these difficulties. For instance,
(1997) cited that third-party technology providers are available to companies
who cannot invest on SCM systems. One example is GE Information Services; the
company provides technology services in order for suppliers and retailers to
transfer EDI documents such as advance ship notices (ASN) through online means.
With this service, invoices and purchase orders are transformed into EDI format
in order to have these business documents transferred electronically. Before the
arrival of the shipment, a packaging slip in electronic format is sent by the
vendors through ASN. Some companies however, are not as eager to use the ASN as
shipment information can be inaccurate; this perhaps is due to the fact that
data relayed through this service are not done and received in real-time. Thus,
when shipment details suddenly change, inaccuracies can occur frequently.
Moreover, errors in data encoding can also happen, making the service less
reliable.

Despite the difficulties
encountered in SCM application, companies who do not have access to up to date
technologies or the budget to purchase them have other possible alternatives.
Though some problems are still related to these less expensive alternatives,
costly SCM technologies also have their downsides. This clearly stresses that
while SCM is beneficial to the apparel industry, inaccuracies, errors and
inefficiencies typically observed in any business operations is not totally
taken away by SCM application. From this analysis, it is then emphasized that
companies in general should focus on SCM systems and tools that really work for
their individual operations. Moreover, if certain SCM applications are not
attainable, companies should then go with other alternatives.

V. Summary, Conclusion and Recommendations

Summary

Supply chain management (SCM) has long been
considered an important aspect of most business operations, particularly those
who deal with multiple suppliers, retailers and customers. This type of business
setting is very much evident in the apparel industry; however, there had been
limited researches investigating on what SCM techniques are used by apparel
companies. Moreover, the effects of this strategy and difficulties apparel
companies encounter with its implementation have not been researched as much as
other business industries.

This study then used small-scale apparel
companies based in Hong Kong to achieve these objectives. By means of using the
combined qualitative and quantitative approaches, the researcher gathered data
using the survey and interview method. Five apparel companies had been selected
for the investigation; 5 members of the companies’ management sector went
through the interview process while 25 staff employees answered the Likert
questionnaire prepared by the researcher. The interview process was conducted in
order to obtain relevant information on the SCM systems applied by the
companies, specifically the techniques, requirements, benefits and problems
encountered in the process of implementation. On the other hand, the survey was
carried out in order to determine which among the benefits and difficulties in
SCM implementation affects the apparel companies.

In order to analyze the gathered survey
results, the weighted mean for each survey item was computed and compared to a
Likert scale for interpretation. The results were then subdivided into
categories for clearer presentation and comprehension. The results of the
interview were incorporated to the values acquired from the survey. Relevant
literatures were also integrated to support the gathered findings.

Conclusion

Based from the data gathered, a number of
important conclusions can be drawn out:

1. The selected apparel companies apply similar
SCM techniques to handle their supply chains.
These techniques include the use of multiple communication systems such as the
internet and telephone in order to transmit valuable real-time business
information to other supply chain members. The investigated apparel companies
also utilized the expertise and assistance of SCM experts in designing and
implementing their existing SCM systems. The respondents also ensured the
effective application of their chosen systems by means of careful and extensive
project planning.

2. In terms of benefits, the apparel companies
obtained a number of advantages out of SCM application.
Among several companies, majority of the respondents agree that communication
benefits are one of the most significant advantages gained from supply chain
management. This is then followed by the improvement of the relations among
supply chain members and the enhancement of the different business abilities of
the manufacturers, retailers and suppliers. In turn, these significant
developments benefited the companies as sales improved and customer satisfaction
increased.

3. In spite of the beneficial effects of SCM
application to the apparel industry, certain difficulties have been encountered
by the companies in line with its application.
Among several problems, the small-scale companies appear to be most affected by
the technology and cost factors. With limited resources, the selected companies
were unable to upgrade their SCM systems to more modern programs. This in turn,
has affected their opportunity to acquire greater market shares and higher
customer satisfaction as well as overcome intense levels of competition.

4. Though the selected companies encounter some
difficulties with SCM, various alternatives are made available for them to
enhance their systems. Considering
that even expensive tools for SCM application had their downsides as well,
difficulties in SCM is inevitable. However, companies using this can be
resourceful in coming up with ways on how their systems can be improved.

Recommendations

From the acquired findings, certain
recommendations can be of use to apparel companies, especially smaller one, in
order to maintain and improve their SCM systems:

1. Apparel companies may consider trying out
the services offered by third-party technology providers in order to transmit
supply chain information via electronic means.
Developing and implementing SCM really do require considerable investments;
however, there are less costly alternatives whose functions are similar to
customized systems. Problems like data inaccuracies due to human error can be
remedied through efficient human resource delegation. To address the data
inaccuracies caused by unexpected events, companies may consider implementing
multiple communication systems (e.g. fax, telephone) so as to overcome this
problem.

2. Companies should not only deal with SCM
experts to determine the most appropriate system.
All possible options, including how these systems would evolve in the future
should be considered. Before spending on the latest SCM technology available,
the company should also consider how this system would likely change after a few
years as well as the cost to update it. If the company does not have enough
resources to support these system developments, then other alternative should be
considered. In this way, companies will not be stuck in old and less effective
SCM systems when the time comes. This recommendation also calls for more
efficient planning procedures.

3. In order to prevent the accumulation of
problems brought about by SCM implementation, companies applying it should also
design a performance assessment program and monitor the outcomes their selected
systems. Immediate response to
problem areas identified through regular monitoring can help smaller companies
to overcome business issues such as intense competition or decreasing market
share. The ability of the companies to overcome business challenges is not only
reliant on technology and innovation but also on the speed of their reaction to
problematic issues.

4. In making SCM-related decisions, companies
should not focus on the latest technologies or systems.
Rather, they should consider the resources available and accessible to them.
This recommendation is geared towards the effective implementation of SCM;
through wasteful plans, ineffective designs and impractical systems will be
prevented. Thus, in making SCM plans, it is essential that the requirements for
efficient implementation are taken into account. This would enable companies
applying SCM to ensure that all essentials have been accounted for and that
decision are based on what resources they have.

APPENDIX A: Questionnaire

Benefits of Supply Chain Management (SCM):

SCM is helpful
in determining the needs of consumers and achieving their satisfaction.

5 4
3 2 1

Strongly Agree Agree Uncertain Disagree
Strongly Disagree

SCM allows the
reduction of response time within the supply chain.

5 4
3 2 1

Strongly Agree Agree Uncertain Disagree
Strongly Disagree

SCM is useful in
integrating the activities within the supply chain.

5 4
3 2 1

Strongly Agree Agree Uncertain Disagree
Strongly Disagree

SCM system
facilitates the creation of trust among supply chain members.

5 4
3 2 1

Strongly Agree Agree Uncertain Disagree
Strongly Disagree

SCM makes
communication among supply chain members faster, easier and more frequent.

5 4
3 2 1

Strongly Agree Agree Uncertain Disagree
Strongly Disagree

SCM increases
the Just-In-Time (JIT) capability of the company and the suppliers.

5 4
3 2 1

Strongly Agree Agree Uncertain Disagree
Strongly Disagree

SCM enables the
sharing of information both through informal and formal means.

5 4
3 2 1

Strongly Agree Agree Uncertain Disagree
Strongly Disagree

SCM helps in
obtaining useful feedback from the suppliers.

5 4
3 2 1

Strongly Agree Agree Uncertain Disagree
Strongly Disagree

SCM allows the
company to build closer and stronger relations with the customers.

5 4
3 2 1

Strongly Agree Agree Uncertain Disagree
Strongly Disagree

SCM helps the
company in improving its current supply chain system.

5 4
3 2 1

Strongly Agree Agree Uncertain Disagree
Strongly Disagree

Difficulties in implementing Supply Chain
Management:

The company
found SCM implementation difficult as some suppliers lack the interest to
participate in the system.

5 4
3 2 1

Strongly Agree Agree Uncertain Disagree
Strongly Disagree

The
implementation of SCM has been challenging as customers are not showing
interest to the system.

5 4
3 2 1

Strongly Agree Agree Uncertain Disagree
Strongly Disagree

The company
lacks the ability to control the supply chain, making it hard to apply SCM.

5 4
3 2 1

Strongly Agree Agree Uncertain Disagree
Strongly Disagree

SCM
implementation has been difficult as advanced information systems are not
available.

5 4
3 2 1

Strongly Agree Agree Uncertain Disagree
Strongly Disagree

The
implementation of SCM had been problematic due to the geographical distance of
the suppliers or customers of the supply chain.

5 4
3 2 1

Strongly Agree Agree Uncertain Disagree
Strongly Disagree

APPENDIX B: Interview
Schedule

What SCM techniques have the company applied
for its supply chain operations?

What are the reasons of the company for
implementing a supply chain system?

What requirements have the company considered
in order to implement SCM?

What makes the company’s existing system
effective and beneficial?

What problems or issues have the company
encountered in relation to SCM?